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NEW YORK -- Rajat Gupta, a consummate business insider who once sat on the board of Goldman Sachs Group, was convicted on Friday of leaking secrets about the investment bank at the height of the financial crisis, a major victory for prosecutors seeking to root out insider trading on Wall Street.

The Manhattan federal court jury delivered its verdict on its second day of deliberations, finding that Gupta had fed stock tips to his hedge fund manager friend Raj Rajaratnam, which he had gleaned from confidential Goldman board meetings.

Gupta is also a former director at Procter & Gamble and a former executive at the elite business consulting firm McKinsey & Co. He is the most prominent person convicted in the government's crackdown in the last few years on illicit trading involving hedge funds and financial consultants.

The 63-year-old Gupta was found guilty of three counts of securities fraud and one count of conspiracy. The jury acquitted him on two other securities fraud charges.

He could receive up to 25 years in prison. The maximum sentence for securities fraud is 20 years and the maximum sentence for conspiracy is five years, though it seems unlikely that he would receive such a heavy punishment. Rajaratnam was convicted of 14 counts of securities fraud and conspiracy last year and is serving an 11-year prison term.

After the verdict, an ashen-faced Gupta glanced grimly back at his wife and four daughters in the courtroom. Later, the family stood hugging each other in the courtroom as Gupta tried to console his distraught daughters.

His defense lawyer, Gary Naftalis, said Gupta is likely to appeal.

Since being implicated in the Rajaratnam case more than a year ago, Gupta has denied the charges. In addition to his business background, the Indian-born Gupta was known for his work with philanthropies fighting AIDS, malaria and tuberculosis in developing countries.

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After the verdict, jury foreman Rick Lepkowski said he was impressed by Gupta's life story and the support he received from his family, who regularly sat in the front row of the courtroom during the trial.

"I wanted to believe the allegations weren't true," said Lepkowski, a nonprofit group executive from Ossining, New York. "At the end of the day, when all of the evidence was in, it was in my opinion, overwhelming."

Among the most dramatic contentions against Gupta was prosecutors' charge that he had told Rajaratnam about a crucial $5 billion injection into Goldman by Warren Buffett's Berkshire Hathaway at the height of the financial crisis.

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Part of the prosecution's evidence was that within a minute of disconnecting from a Sept. 23, 2008 board call approving the investment, Gupta called Rajaratnam at his Galleon Group office in New York. Rajaratnam then hurriedly ordered his traders to buy as much as $40 million in Goldman stock because only minutes remained before the market closed.

At trial, Gupta's lawyers argued that prosecutors "had no real, hard, direct evidence" against Gupta, who did not take the witness stand.

U.S. District Judge Jed Rakoff has set sentencing for Oct. 18.

The case is USA v Gupta, U.S. District Court for the Southern District of New York, No. 11-907.

41 Comments

there are thousands and thousands of these pricks out there last year alone, and this case is to to let us think someone is actually putting an end to the insider trading that has gone on for over 80 years!!!! Politicians were just banned from insider trading this past year....are you kidding me??? and the loopholes continue, the SEC is a fraud as is the entire financial facade of fair, independent and equal opportunity to make money on the stock market is..........

Rajat Gupta was on the board of directors of AMR (American Airlines) AA is currently in bankruptcy protection. I wonder how many others on the AMR BOD are corrupt like him?June 22, 2012 Judge Lane rules most likely in favor to throw out all work rules for AA pilots, flight attendants and mechanics. AA is based and headquartered in Texas, yet filed for BK protection in corporate friendly NYC.

I hope the judge throws the book at him. too bad they can only give him 25 years. these guys have everything, they were fortunate to be born intelligent and have other talents. They've made millions and the still are greedy. We need to send these guys to prison for their lifetime. Thankfully at least the lawyers will eat up a few million or more, I hope.

Rajat Gupta Guilty or Nancy Pelosi. What's the difference??? We have Politicians who commit crimes out in the open because its legal for them to do so like:Nancy Pelosi Blocked Credit Card Reform While Investing Millions in Exclusive Visa Stock Offering

Former Speaker of the House–and current Minority Leader–Nancy Pelosi apparently bought $1 million to $5 million of Visa stock in one of the most sought-after and profitable initial public offerings (IPO) in American history, thwarted serious credit card reform for two years, and then watched her investment skyrocket 203%.Her response to a reporter when asked about this was " What's your point? I did nothing wrong."Politicians spend most of their time fighting off law suites and the ethics committee for they crimes they were caught doing. The rest of their time is spend on defending all of the illegal's in this country who cry discrimination because they might get deported back to their own cesspool of a country. The politicians fight to keep them here so they can turn this country into a mirror image of the place they just left.